LlamaRisk broadly supports this proposal and is ready to assist Aave Labs with confidential design aspects. We understand that Aave Labs has established key partnerships and assignments to address this initiative’s legal, compliance, finance, and operational requirements. Within this framework, we envision LlamaRisk as an independent legal audit function, ensuring that Aave DAO stakeholders remain well-informed of any risks associated with the RWA initiative.
Areas where greater clarity would benefit the DAO
Legal and Regulatory Framework:
- Introducing tokenized securities into a DeFi protocol may require compliance with securities regulations, licensing, and partnerships with regulated entities, even in a permissioned context. Could you elaborate on the intended legal structure for this RWA instance? We are particularly interested in the contractual arrangements between Aave Labs, asset issuers, and other ecosystem participants. Additionally, please clarify Aave Labs’ legal structure and how it plans to manage potential liabilities and regulatory obligations.
User Qualification and AML/KYC Compliance:
- How will the qualification criteria established by asset issuers be integrated into the protocol? Will AML/KYC checks performed by issuers be communicated to LlamaRisk or Aave Labs as the Executive Role designee? Further detail on the process for onboarding qualified users would be valuable, especially given the broader challenges of AML/KYC compliance in RWA-focused DeFi initiatives.
Asset Issuers, Facilitators, and Liquidators:
- We assume that licensed asset issuers intending to mint permissionless stablecoins with RWA collateral will be responsible for obtaining all necessary regulatory approvals. Please confirm if this responsibility rests solely with the issuers or if Aave Labs will play any role in this process.
- What are the eligibility criteria and onboarding procedures for permissioned liquidators? Will Aave Labs be responsible for contracting and vetting these parties, and what standards will be applied?
Incentive Structure:
- Will growth incentives be directed towards the permissioned side of the instance, the permissionless side, or both? Clarifying the allocation of incentives is important, as this may impact regulatory considerations and the classification of tokens or rewards.